Aquila European Renewables Income Fund PLC (the “Company“) today announces the publication of a prospectus in relation to an initial public offering (“IPO“) of shares on the premium segment of the main market of the London Stock Exchange.

The Company is seeking to raise €300 million by way of a Placing and an Offer for Subscription of Ordinary Shares, with an additional placing programme of up to 600 million Ordinary Shares. The Company will seek to generate stable returns, principally in the form of income distributions by investing in a diversified portfolio of Renewable Energy Infrastructure Investments.

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Highlights

  • The Company is targeting a raise of €300 million via a Placing and Offer for Subscription of ordinary shares to be admitted to trading on the premium segment of the main market of the London Stock Exchange.
  • The Company will look to invest a diversified portfolio of renewable energy technologies including wind, solar, and hydro across continental Europe and the Republic of Ireland (excluding UK) with diversified revenue sources including Feed-in-tariffs and PPAs.
  • The Company will acquire mostly operational assets which generate income and Aquila Capital has identified a pipeline of opportunities across Iberia and Scandinavia which meet the Investment Policy and may be suitable for acquisition by the Company.
  • The Company is targeting a total IRR in the region of 6% – 7.5% (net of fees and expenses on the Issue Price) over the long term, with an annual dividend yield of 5 cents per Ordinary Share from 2021, with dividends paid quarterly. (See Note 1 below).
  • Hamburg-based Aquila Capital, the company’s Investment Adviser, has 18 years’ experience in alternative investment, more than 250 employees located in fourteen offices across Europe and €8.2bn AuM/AuA. (See Note 2 below).
  • Christine Brockwell, who has over 13 years’ experience in renewable energy, will lead the Investment Adviser’s team supported by a team of individuals dedicated to energy and infrastructure.
  • Strong corporate governance – four independent directors, including chairman Ian Nolan who was former chief investment officer of the UK Green Investment Bank, with a complementary mix of fund and renewable experience.
  • Numis Securities Limited is acting as Sponsor and Bookrunner.
  • The prospectus is available to download at www.aquila-european-renewables-income-fund.com.

Christine Brockwell, lead investment adviser on behalf of Aquila European Renewables Income Fund PLC, commented:

“This is a unique proposition for investors to take advantage of the rapidly advancing renewable energy sector in Europe and to participate in opportunities presented by Europe’s energy transition to a low carbon society, which is reshaping the energy market across the continent. Aquila Capital has a proven track record of investing in the sector and will use this expertise to provide a balanced mix of technologies that provide stable cash flows and allow for reliable maintenance of dividend targets for investors.”

Ian Nolan, chair of Aquila European Renewables Income Fund PLC, said:

“We are offering investors an opportunity that is diversified by geography, technology and revenue source. We are excited to float our fund in London which has established itself as the home of investment trust listings in Europe including a number of renewable funds.”

Commercial Summary

The Company is a Euro-denominated UK domiciled investment company investing in renewable energy technologies across continental Europe and the Republic of Ireland and providing a diversified revenue stream from energy sales. The Company aims to build a portfolio of Renewable Energy Infrastructure Investments across a diversified geographical region with a mix of renewable energy technologies and revenue sources.

Subject to having sufficient distributable reserves to do so, the Company is targeting a dividend of 1.5 cents per Ordinary Share in relation to the period ending 31 December 2019, a minimum of 4.0 cents in relation to the financial year ending 31 December 2020 and 5 cents per Ordinary Share in respect of subsequent financial years, with the aim of increasing this dividend progressively over the medium term. The Company is targeting a total return in the region of 6.0 per cent. to 7.5 per cent. (net of fees and expenses) on the Issue Price to be achieved over the long term through the reinvestment of excess cash flows, asset management initiatives and the prudent use of portfolio leverage.

The Investment Adviser will advise on potential renewable energy investments in line with the Investment Policy. The Investment Adviser is part of the Aquila Group. The Aquila Group was founded in 2001. It is independently owned and operated with approximately €8.2 billion of assets under management/assets under administration and more than 250employees located in fourteen offices across Europe and Asia as at 31 December 2018. The Aquila Group is focused on performance and value creation for its clients by spotting macro trends, dislocations and tipping points coupled with bottom-up management by highly specialised investment teams. The Aquila

Group pursues operational stability and stringent corporate governance to generate sustainable positive returns for its investors. It centres on sustainable trends in the areas of renewable energy, social housing, green logistics, infrastructure, timber and agriculture as well as niche financial market strategies. The Aquila Group offers a focused range of real asset investment solutions managed by dedicated specialists in their respective asset classes.

The Investment Adviser has the ability to source assets from accounts, funds and finance vehicles managed or advised by the Aquila Group as well as from third parties. Following due diligence, the Investment Adviser will make a proposal to the AIFM about the suitability of a particular asset to form part of the Company’s investment portfolio. The AIFM will consider any proposal and make a recommendation to the Board. The Board will consider the recommendation and decide whether or not to acquire the relevant asset to form part of the investment portfolio.

The Investment Adviser has identified an Enhanced Pipeline of opportunities which are deemed suitable for the Company to invest in and which fulfil the Investment Policy and otherwise would be suitable for acquisition by the Company. The Enhanced Pipeline comprises 16 assets that are (i) held in Aquila Managed Funds (nine assets) or (ii) in negotiations (including some where the Investment Adviser is in exclusivity) with Aquila (seven assets).

The Investment Adviser is entitled to a fee equal to:

  • 0.75 per cent. per annum of NAV (plus VAT) of the Company up to €300 million;
  • 0.65 per cent. per annum of NAV (plus VAT) of the Company between €300 million and €500 million; and
  • iii) 0.55 per cent. per annum of NAV (plus VAT) of the Company above €500 million

During the first two years of its appointment, the Investment Adviser has undertaken to apply its fee (net of any applicable tax) in subscribing for, or acquiring, Ordinary Shares.

The Board is chaired by Ian Nolan, the former Chief Investment Officer of the UK Green Investment Bank and 3i PLC. The Board collectively will consider and approve the acquisition by the Company of proposed Renewable Energy Infrastructure Investments. The Board will supervise the AIFM, who will be responsible for making recommendations in relation to proposals put forward by the Investment Adviser.

Applications will be made to the Financial Conduct Authority and the London Stock Exchange for all of the Ordinary Shares of the Company to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities.

The IPO is being structured as (i) a placing primarily targeted at institutional and professionally-advised private investors (“Placing“) and (ii) an offer for subscription available to investors (“Offer for Subscription“), who are likely to be eligible to hold such investment via an ISA.

The latest time and date for receipt of Application Forms under the Offer for Subscription is 11 a.m. on 30 May 2019. The latest time and date for placing commitments under the Initial Placing is 12 noon (UK time) on 30 May 2019. First Admission and dealings are expected to commence at 8.00 a.m. (UK time) on 5 June 2019. Numis Securities is acting as sponsor, broker and placing agent in the UK.

Investment Opportunity

The Directors believe that an investment in the Company offers the following characteristics:

Experienced Investment Adviser

  • Aquila has been appointed as the investment adviser to the AIFM in respect of the Company. Aquila manages assets located across continental Europe and the UK.
  • The Aquila Group was founded in 2001, has 18 years’ experience in alternative investment solutions and has approximately €8.2 billion of assets under management or administration.
  • Aquila has undertaken transactions worth approximately €5.3 billion, with aggregate capacity across wind, solar PV and hydro energy of approximately 3.8 GW.

Depth of resource and expertise for execution and asset management

  • The Aquila Group has a team of investment professionals that actively pursue, negotiate and execute renewable energy transactions.
  • The Aquila Group has direct access to developers and a reputation as a reliable transaction counterparty.
  • The Aquila Group’s specialist asset management expertise offers the opportunity to optimise asset performance.

Enhanced Pipeline

  • The Investment Adviser has identified a pipeline of renewable energy assets for potential acquisition by the Company.
  • The majority of these assets are held in Aquila Managed Funds as at the date of this document.
  • In addition, Aquila is engaged in negotiations (in some cases exclusive) on a number of opportunities sourced from third parties.

The Directors therefore have confidence that the Net Issue Proceeds can be deployed to acquire suitable assets within six to twelve months of Admission.

Asset and market diversification

  • The Company is differentiated by its ability to invest in wind, solar PV and hydro assets. The seasonal production of these asset types works to balance the aggregate portfolio cash flow, i.e. wind power produces more electricity in the winter time and solar produces more electricity in the summer time.
  • The Company will invest throughout continental Europe and the Republic of Ireland. This geographical diversification serves to reduce the exposure of the Company to a particular energy market.

Contracted cash flows

  • The Company will have the option to develop a strategy for optimising the contracted revenues available to it by balancing the mix of long and short-term PPAs it enters into.
  • All asset types are expected to have operation and maintenance agreements in place.

Independent Board and experienced AIFM

The Board comprises individuals, all of whom are independent of Aquila, from relevant and complementary backgrounds offering experience in the management of listed funds, as well as in the renewables and infrastructure sectors, from both a public policy and a commercial perspective.

The Company has appointed International Fund Management Limited (‘‘IFM’’) as its ‘Alternative Investment Fund Manager’ to provide portfolio and risk management services. IFM is part of the PraxisIFM Group, one of the largest independent financial services groups based in the Channel Islands and listed on The International Stock Exchange.

Investment Objective

The Company will seek to generate stable returns, principally in the form of income distributions by investing in a diversified portfolio of Renewable Energy Infrastructure Investments.

Investment Policy

The Company will seek to achieve its investment objective set out above, predominantly through investment in Renewable Energy Infrastructure Investments in continental Europe and the Republic of Ireland comprising (i) wind, photovoltaic and hydropower plants that generate electricity through the transformation of the energy of the wind, the sunlight and running water as naturally replenished resources; and (ii) non-generation renewable energy related infrastructure associated with the storage (such as batteries) and transmission (such as distribution grids and transmission lines) of renewable energy, in each case either already operating or in construction/development (‘‘Renewable Energy Infrastructure Investments’’).

The Company will acquire a mix of controlling and non-controlling interests in Renewable Energy Infrastructure Investments and may use a range of investment instruments in the pursuit of its investment objective, including but not limited to equity, mezzanine or debt investments.

In circumstances where the Company does not hold a controlling interest in the relevant investment, the Company will seek, through contractual and other arrangements, to, inter alia, ensure that the Renewable Energy Infrastructure Investment is operated and managed in a manner that is consistent with the Company’s Investment Policy, including any borrowing restrictions.

Investment Restrictions

The Company aims to achieve diversification principally through investing in a range of portfolio assets across a number of distinct geographies and a mix of the wind, solar and hydro technologies. The Company will observe the following investment restrictions when making investments:

  • no more than 25 per cent. of its Gross Asset Value (including cash) will be invested in any single asset;
  • following full investment of the Net Issue Proceeds, the Company’s portfolio will comprise no fewer than six Renewable Energy Infrastructure Investments;
  • no more than 20 per cent. of its Gross Asset Value (including cash) will be invested in non-generation renewable energy related infrastructure associated with the storage (such as batteries) and transmission (such as distribution grids and transmission lines) of renewable energy;
  • no more than 30 per cent. of its Gross Asset Value (including cash) will be invested in  assets under development and/or construction;
  • no more than 50 per cent. of the Gross Asset Value (including cash) will be invested in assets located in any one country;
  • no investments will be made in assets located in the UK; and
  • no investments will be made in fossil fuel assets.

Compliance with the above restrictions will be measured at the time of investment and non-compliance resulting from changes in the price or value of assets following investment will not be considered as a breach of the investment restrictions.

The Company will hold its investments through one or more SPVs and the investment restrictions will be applied on a look-through basis.

Although not forming part of the investment restrictions or the Investment Policy, where Renewable Energy Infrastructure Investments benefit from a PPA, the Company will take reasonable steps to avoid concentration with a single counterparty and intends that no more than 25 per cent. of income revenue will be derived from a single offtaker.

Use of Proceeds

The Gross Issue Proceeds will be utilised in accordance with the Investment Policy to acquire suitable Renewable Energy Infrastructure Investments, to meet the costs and expenses of the Issue, to redeem Management Shares and for working capital purposes. The Company expects the Investment Adviser to advise the AIFM, which will make recommendations to the Board, such as to enable deployment of the Net Issue Proceeds in renewable energy investments within a period of six to twelve months after Admission (subject to market conditions). The exact composition of the fully invested portfolio and the identity of specific investments will depend on market conditions and the continued availability of investments which satisfy the Investment Policy. The Company will invest in a mixture of wind, solar and hydro technologies, and may at times be more heavily weighted towards one than others depending on market conditions.

The Enhanced Pipeline

The Investment Adviser has identified a number of renewable energy infrastructure investment opportunities that it considers would meet the Investment Policy and otherwise be potentially suitable for acquisition by the Company.

Investors should note that no opportunities from the Enhanced Pipeline have been contracted to be acquired by the Company, nor does the Company have a right of first refusal over the opportunities in the Enhanced Pipeline. The Investment Adviser is under no obligation to make the opportunities in the Enhanced Pipeline available to the Company and will apply its Allocation Policy in respect of the allocation of opportunities among Aquila Managed Funds. The opportunities in the Enhanced Pipeline are indicative of the type and size of investment that may be made by the Company. To the extent opportunities in the Enhanced Pipeline are available for investment by the Company following Admission, the Investment Adviser will advise the AIFM, which will, following its own evaluation of the Investment Adviser’s advice recommend to the Board that the Company acquire one or more investments if it considers it appropriate to do so.

Origination of Investments

Potential investments will be sourced from both Aquila Managed Funds and third parties in the wider market.

The Board

The Board comprises individuals, all of whom are independent of Aquila, from relevant and complementary backgrounds offering experience in the management of listed funds, as well as in the renewables and infrastructure sectors, from both a public policy and a commercial perspective.

The Board is chaired by Mr Nolan, who led the team which was recruited by the UK Government in 2011 to establish the UK Green Investment Bank, and was its Chief Investment Officer until 2014. Previously, Ian held the position of Chief Investment Officer at 3i PLC and was a director of Telecity Group plc. He is currently a Partner and Chairman of the Investment Committee of Circularity Capital LLP. Ian has three decades of experience in finance, private equity and investment management. He qualified as a chartered accountant with Arthur Andersen and graduated with a BA in Economics from Cambridge University.

David MacLellan is the founder and currently Chairman of RJD Partners, a midmarket private-equity business focussed on the services and leisure sectors. Previously, David was the Chairman of John Laing Infrastructure Fund and an executive director of Aberdeen Asset Managers plc following its acquisition in 2000 of Murray Johnstone where he was latterly Chief Executive having joined the company in 1984. David has served on the boards of a number of companies and is currently a non-executive director of J&J Denholm Limited and Granite One Hundred Holdings Limited. He is a past council member of the British Venture Capital Association and is a member of the Institute of Chartered Accountants of Scotland.

Kenneth MacRitchie has 30 years’ experience of advising on the financing, development and operation of independent power projects across Europe, Middle East and Africa. He was a partner at the global law firm, Clifford Chance and, thereafter, at Shearman & Sterling where he served on their Management Board. He also has experience of advising the UK Government on renewable energy policy, and led the establishment of Low Carbon Contracts Company Limited, the UK Government owned company which provides subsidies for the UK renewables industry. He is a graduate of the Universities of Glasgow, Aberdeen and Manchester.

Dr Patricia Rodrigues has over 15 years of leadership experience in infrastructure and real asset investment and management and investment banking. She began her career at Morgan Stanley. Subsequently, she worked for Macquarie Group, including as a Managing Director (Real Assets), where she was responsible for developing new Infrastructure, Real Estate, Agriculture Timber and Energy investment products globally. She was Head of Portfolio Investment Management for UK Green Investment Bank before leading the growth strategy of the non-real estate Real Assets discretionary business for The Townsend Group. More recently, she served as Infrastructure Senior Director for PSP Investments. Patricia graduated with an M Eng-equivalent in Chemical Engineering from The University of Porto and a PhD in Chemical Engineering from Cambridge University.

Issue Costs

The costs and expenses of the Issue which will be paid by the Company estimated to be no more than two per cent. of Gross Issue Proceeds and not in excess of €6 million if the target Gross Issue Proceeds are raised. Such costs and expenses are not, however, capped.

The costs and expenses of the Issue payable by the Company will be paid out of the Gross Issue Proceeds and will therefore be borne indirectly by the Investors.

If the Company achieved the target Gross Issue Proceeds of €300 million pursuant to the Issue, the Net Asset Value of the Company immediately following Admission would increase by an estimated €294 million.

Expected timetable

All references to times in this Prospectus are to London times, unless otherwise stated.

Expected Issue Timetable  
Placing and Offer for Subscription open 10 May 2019
Latest time and date for receipt of Application Forms and payment in full under the Offer for Subscription 11a.m. on 30 May 2019
Latest time and date for receipt of Placing commitments 12 p.m. on 30 May 2019
Announcement of the results of the Issue 31 May 2019
Admission to the premium segment of the Official List and commencement of dealings on the London Stock Exchange 5 June 2019
CREST accounts credited 5 June 2019
Dispatch of definitive share certificates (where applicable) Week commencing 17 June 2019
Expected Placing Programme Timetable  
Placing Programme opens 6 June  2019
Publication of Issue Price in respect of each Subsequent Placing on, or as soon as practicable after, the

announcement of each Subsequent Placing

Admission to the premium segment of the Official List and commencement of dealings on the London Stock Exchange 08:00 on each day on which Ordinary Shares are issued pursuant to the Placing Programme
CREST accounts credited as soon as practicable after the issue of Ordinary Shares pursuant to the Placing Programme
Dispatch of definitive share certificates (where applicable) by no later than 14 business days after Admission of the relevant Ordinary Shares
Latest date for Ordinary Shares to be issued pursuant to the Placing Programme 9 May 2020

 

The dates and times specified above and mentioned throughout this Prospectus are subject to change. In particular the Directors may, with the prior approval of Numis, postpone the closing time and date for the Placing and Offer for Subscription by up to two weeks. In the event that such date is changed, the Company will notify investors who have applied for Ordinary Shares of changes to the timetable by the publication of an announcement through a Regulatory Information Service.

Unless otherwise defined, capitalised words and phrases used in this announcement shall have the meaning given in the Prospectus.

Notes

Note 1 – These are targets only and not forecasts. There can be no assurance that these targets can or will be met and it should not be seen as an indication of the Company’s expected or actual results or returns. Accordingly, investors should not place any reliance on these targets in deciding whether to invest in Ordinary Shares or assume that the Company will make any distributions at all.

Note 2 – Assets under management (AuM) based on net asset value (NAV); enterprise value for real asset-funds respectively; Assets under administration (AuA) of the AIFM Alceda include funds managed by Aquila Capital.

For further details contact:

Media contacts:

Smithfield Consultants | 020 7903 2527 | aquila@smithfieldgroup.com

Ged Brumby

John Kiely

Andrew McLagan

Sponsor, Broker and Placing Agent in the UK

Numis Securities (UK investors)                   020 7260 1000

Tod Davis

David Benda

Vicki Paine

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